Question
Read the case study below and prepare a Business Report as per the below requirements; A UAE based company called Afreen Trading is engaged in
Read the case study below and prepare a Business Report as per the below requirements; A UAE based company called Afreen Trading is engaged in the manufacturing, exporting and supplying of the beautiful Ladies Hand Bags in three different colours, White, Brown and Purple, which are all manufactured from the same form of raw material including pearl buffalo horn plates. The Company has used traditional full costing to allocate overheads to its products using direct labour hours. The Company is now considering using an activity-based costing system to improve its profitability. Information for the three Hand bags is given below for your analysis:
The price for raw materials per kilogramme is $2.40 and the direct labour cost per hour is $29.60. The annual overhead costs along with the relevant cost drivers have been analysed below:
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Required:
Also Calculate the full cost per unit of each product using ABC (activity-based costing). [10%]
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